In short
Healthcare costs as a retirement “expense trap,” plus how to plan earlier (especially via Health Savings Accounts), and a Q&A covering savings-rate accounting, mega backdoor Roth, Social Security claiming, and changes to 401(k) employer matching.
Guests/backgrounds
No named guests; the episode is hosted by The Money Guy Show’s Brian and Bo (with additional team members referenced, e.g., a video editor).
Key claims
63% of Americans ages 60–70 worry most about healthcare costs in retirement; medical issues are the leading cause of U.S. bankruptcies. Fidelity estimates a 65-year-old retiring in 2025 will spend over $172,000 on healthcare/medical expenses. 1 in 5 Americans have never considered healthcare needs in retirement. HSA is described as a “triple tax advantage” vehicle (deduction, tax-deferred growth, tax-free qualified withdrawals). Social Security claiming and Medicare plan choice can materially change retirement outcomes.
Notable examples
Age-based monthly “starter” HSA contributions (e.g., ~$33/month at age 20 vs ~$499/month at age 50) framed against the $172,000 estimate; mega backdoor Roth example of $100/week after maxing 401(k) deferrals; Social Security deferral framed as ~8%/year at full retirement age to 70; employer match removal triggers re-triage using the financial order of operations.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOUnderstanding Retirement Expenses
0:34 to 1:30
Explore the often-overlooked expense impacting retirement planning.
“It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks.”
Healthcare Costs Concern
1:30 to 2:34
Discuss the rising concern of healthcare costs among Americans aged 60-70.
“So we found that 63 % of Americans, this is according to eHealth, 63 % of Americans age 60 to 70 say that healthcare costs are their top concern in retirement.”
The Importance of Planning
2:34 to 4:08
Understand why it's vital to consider healthcare needs in retirement planning.
“Fidelity does an annual study, and they found that the average 65-year-old retiring in 2025 can expect to spend over$172 ,000 on health care and medical expenses in retirement.”
Health Savings Accounts Explained
4:08 to 5:08
Learn about Health Savings Accounts and their tax advantages.
“So the ultimate question then becomes, okay, well, you sitting out there in audience land, what can you do?”
Saving for Healthcare Costs
5:08 to 6:41
Explore how different age groups can effectively save for healthcare.
“Even in our show meeting this morning, one of our video editors, when he saw the$173 ,000 that Fidelity estimated, he goes, that's a big number.”
Health as Wealth
6:41 to 8:44
Discover the relationship between health and financial wellbeing.
“So a little bit of preparation can go a long way.”
Choosing Medicare Wisely
8:44 to 11:40
Understand the importance of selecting the right Medicare plan.
“this is just something worth noodling in the back of your mind.”
Planning for Unknowns
11:40 to 12:09
Learn how to prepare for unknown expenses in retirement.
“Yes, there are going to be things that are unknown.”
Engaging with the Audience
12:09 to 12:55
Encouragement to interact and provide feedback for future episodes.
“We want you to understand that there is a better way to do money.”
Introduction to Audience Engagement
14:00 to 14:54
Learn about the importance of audience feedback in shaping content.
“That happened last year and you guys showed up in force, but we've actually realized it's like most things.”
Show all 30 chapters
Survey Participation and Bias Discussion
14:55 to 15:32
Explore the dynamics and psychology behind survey participation.
“What I love is how well synced our team is because I was literally going to lean over and say, hey guys, we ought to do a poll.”
Understanding Dividends and Savings Rates
15:33 to 17:54
Discover how dividends and taxes impact savings rates and financial independence.
“Because it's going to say 97 % of the audience said yes, and it'll be like 300 people did it out of the thousands of people in the live stream.”
Navigating Employer Matches and Savings Goals
17:55 to 21:32
Learn how employer matches can aid in reaching savings goals and financial milestones.
“your portfolio makes in terms of dividends and capital appreciation is bigger than what you save.”
The Power of Automatic Reinvestment
21:33 to 23:31
Understand the benefits of automatic reinvestment of dividends and gains.
“Can I throw one more little thing out there?”
Leveraging the Mega Backdoor Roth
23:32 to 24:34
Gain insights into the practical application of the Mega Backdoor Roth strategy.
“If you get caught up in those trends, it's okay as long as it is part of the fun money.”
Explaining After-Tax Contributions and Conversions
24:35 to 28:00
Learn how after-tax contributions work and their benefits.
“It says, can you explain what a real world use of the mega backdoor Roth would look like?”
Understanding the Mega Backdoor Roth
28:00 to 29:12
Learn how to maximize your 401k contributions using after-tax options.
“So one of the things that you can do if your plan allows is you can every week or every pay period put money into the after-tax contribution.”
Personal Anecdotes and Humor
29:12 to 31:20
Hear a light-hearted discussion about personal experiences and humor in finance.
“You want to think through when I think about my next dollar, what's the very best next use of it?”
Discussion on Social Security Strategy
31:20 to 34:22
Explore strategies for claiming Social Security benefits based on individual circumstances.
“You haven't said who this is or what you were listening to.”
Navigating Social Security Decisions
34:22 to 40:00
Understand the nuanced decisions around Social Security claims and their implications.
“When you had to take your car in for maintenance every like 3 ,000 to 5 ,000 miles, what were you taking it in for?”
Employer 401k Match Changes
40:00 to 42:04
Discuss the implications of an employer stopping 401k matching and next steps.
“I would love to know, I'll let Bo do the technical part, but I'd love to know the context on why an employer announces that because that sometimes can be a very big red flag.”
Financial Order of Operations
42:04 to 42:16
Learn about the steps to reassess your financial situation when employer matches change.
“So it could be that, it could be that, but perhaps not.”
Financial Order of Operations
42:23 to 43:52
Learn about the steps to reassess your financial situation when employer matches change.
“It's a free money step in the financial order of operations.”
Addressing Listener Questions
44:50 to 46:58
Explore listener concerns about private equity investments and accredited investor status.
“Well, Cranny, thank you for the question.”
Understanding Private Equity Investments
46:58 to 50:46
Gain insights into the complexities and risks of private equity for accredited investors.
“And we should probably define what an accredited investor is, I think.”
The Impact of Private Equity on Business
50:46 to 54:39
Discuss the influence of private equity on business practices and consumer service.
“I mean, we're talking about seven-figure, eight-figure, multiple eight-figure portfolios still do the same type of investing that folks who are at a million dollars or$2 million do.”
Closing Thoughts and Shoutouts
54:39 to 56:00
Wrap up the episode with shoutouts to listeners and reflections on the discussion.
“And there's like a time where it makes sense.”
Q&A on Inheriting Property
56:16 to 57:46
Discussion about the concept of 'step up in basis' when inheriting property.
“I had this, you know, I do this every week and you would think talking.”
Understanding Tax Implications
57:46 to 1:02:16
Exploring the tax benefits of inheriting appreciated assets versus gifting them.
“So it's a little game of what does this word actually mean?”
Closing Thoughts on Inheritance
1:02:16 to 1:06:24
Final thoughts and reminders on property appraisal and tax basis.
“where someone passed away and left you assets, a lot of times people don't automatically do this.”
Transcript
Automatic transcript. May contain errors.0:00Brian Preston:This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks.
0:45Brian Preston:Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required, compatibility and availability varies 18+.
1:02this one expense is breaking people's retirement brian i am so excited to talk about this because
1:08Brian Preston:i think so often people don't think about this they don't plan for it they don't take it in consideration and this expense can be a huge part of how much you spend when you actually oh i think they think about it it's just they think about it at the wrong time so that's what we're hopefully going to be able to put the train back on the tracks so you don't fall into this trap for your own retirement. So we found that 63 % of Americans, this is according to eHealth, 63 % of Americans age 60 to 70 say that healthcare costs are their top concern in retirement. It's the number one thing that they're worried about that could potentially derail their retirement Now, this ranks higher than if you look at number two and three.
1:52It was running out of money, was 58%. Inflation was 53%. But I know a lot of you are probably looking left, right, and you go, guys, I'm not 60 to 70. We know you're not 60 to 70. We know what our demographics are for our audience. But this is still something I think you ought to pay attention to. Because think about this. The majority of bankruptcies in America is because of medical things that happen. It's the leading cause. So health care is not something just for retirees. We need to be thinking about this for all of us, because this definitely falls into the financial order of operations and making sure you don't put your life in the ditch because you haven't prepared accordingly.
2:30Brian Preston:And when we actually look at numbers, we can put some hard data to this. Fidelity does an annual study, and they found that the average 65-year-old retiring in 2025 can expect to spend over$172 ,000 on health care and medical expenses in retirement. So this is stuff like out-of-pocket drug costs, Medicare, Part B and Part D, co-pays, co-insurance, deductibles, all the things that get wrapped into health care fall into this number, and it is substantial for most retirees. Yeah. And then I think if you roll that in, this is back to, I think people don't think about this until it's too late. Because if you look at the next stat, one in five Americans say they have never considered healthcare needs in retirement.
3:18So remember what I was talking about? Yes, you're not in that 60 to 70 age group of who was interviewed for this survey, but you definitely probably fall into the category of just not giving this enough mental awareness.
3:30Brian Preston:Yeah. I think even though this says one in five have never considered, That means that one in five have never planned for it, have never factored it into their retirement plan. And what makes me concerned about that is that if we fail to plan for something, if we fail to think about it ahead of the time, it's going to make it that much harder. I mean, when we sit down with clients, Brian, one of the things we want to do is we want to kind of iterate what are all the possible outcomes that we could see? What are all the things that we think could happen? What are all the unknown unknowns that we could apply some estimations to?
4:01Brian Preston:And the better we can do that, the better prepared we can be for retirement. And yet, one in five folks aren't even thinking about this. It's not even crossing their radar. So the ultimate question then becomes, okay, well, you sitting out there in audience land, what can you do? Well, you know, once again, applying this back to the financial order of operations, we love the fact that why not start out and see if you even qualified for a health savings account? And for those of you that don't know, HSA, Health Savings Account, is literally a triple tax advantage savings vehicle. When you put money in, you can get a tax deduction on the front end.
4:39Brian Preston:If you're like 13 % of Americans that recognize this, you can then invest those dollars to grow for the future. And if you use it for qualified medical expenses, you get to pull those dollars out completely tax-free. So you get a tax deduction on the front end, tax deferred growth, and then tax-free distributions for medical. It is literally triple tax advantage. It is an amazing savings vehicle that you can use both for current or intermediate term medical expenses as well as future retirement medical expenses. Even in our show meeting this morning, one of our video editors, when he saw the$173 ,000 that Fidelity estimated, he goes, that's a big number.
5:17But then you jumped right to this point. This is something we want to kind of change everybody's perspective. Remember, more than likely, if you're watching this and you're in our key demo, you're somewhere between 25 to 45 years of age. Your number is not the same as the 60 to 70-year-old. So look at this. A 20-year-old who woke up and realized, oh, my gosh, I better make sure I have my health care covered in the future. We're only talking$33 a month or$4 ,000, a little under$5 ,000 lump sum right now. Now for the 30-year-old,$76 a month, a little under$11 ,000 for the 40-year-old. More realistic, probably thinking about these type of things.
5:56$182 a month, a little under$24 ,000. And even for the 50-year-old, my fellow brethren, actually, I'm older than that now. It's$4.99 a month or a lump sum of around$52 ,000. Still a big chunk of money, but if you take that into, that's a third, less than a third of the$173 ,000 that you know is sitting out there waiting for people as they approach retirement?
6:20Brian Preston:Yeah, I think when we think about$173 ,000, it's this big mountain that we think we have to overcome. But you just said, Brian, whether you are age 20 all the way out to age 50, if you can just save somewhere between$30 to$500 and you can just do that consistently, you can be prepared for these expenses. These don't have to be things that slip up on you. So a little bit of preparation can go a long way. And that is also true in how you incur your health care costs later on in life. And so one of the things that we would encourage you is be proactive with your health. Obviously, the decisions that you're making today, no matter what age you are, will have implications to the standard of living that you have later in life.
7:07Brian Preston:So the earlier you can make healthy decisions around how you feed your body, how you move your body and how you recover your body, the earlier you figure that out, the likely, the lower the probability is you're going to have higher health care costs later on in retirement. Well, Bo just put a lot of words to basically saying health is wealth. That's it. And look, Bo has done a great job of keeping himself fit, but he's always just kept himself game ready. Let's be honest here. Whereas I am the better before pitcher that has definitely created.
7:41So somebody who just took my health for granted and then one day realized, you know what, probably in my late 30s, about the time Bo is right now, I realized, you know what, I'm not headed to be where I want to be from a health perspective, maybe financially. And I think a lot of you guys, if you look at yourself in the mirror, you'll say, yeah, I'm doing a great job as a financial mutant, but am I applying the same discipline? Am I applying the same mindset of I'm preparing for the future with deferred gratification to my health. And I think if you put it through that lens, a lot of you, like I said, you're in that key demo, 25 to 45 years of age, go ahead and start investing in that right now.
8:20Because you know what's great about being a financial mutant and having all this wealth that will come to you at a later date is being healthy and being able to actually use this and create memories and live your best life, not only financially, but also from a health perspective.
8:35Brian Preston:There's no point in having all the money saved up and not actually being able to enjoy it, not actually being able to carry out those goals that you have. And if you're a financial mutant, this is just something worth noodling in the back of your mind. It is less expensive to prepare to be healthy than to wait and get sick and have to spend money on that. Prevention is much cheaper. So if you can begin making those decisions early on, There's a really good chance that you can set yourself up for success, but maybe you are someone who is later on in your working life cycle and you're thinking about entering into this stage where you have to make some decisions around things like when am I going to take Social Security or how am I going to cover my health care costs?
9:20Brian Preston:make sure that when you get to that stage, you measure two, three, four times and you select your Medicare plan carefully. Because the fact is the type of insurance you select when you hit age 65 can have a huge impact on the costs that you incur as you move through retirement. Well, I think that this transition is perfect is because we're not the only people that say health is wealth. You can go out there and find so much content on eating better, living better, exercising. But when you go out there and try to find content on how do you choose the best Medicare plan, it gets much, much harder.
9:57You know why? It's because once again, personal finance is very personal and everybody's got different structures. They've got different health needs. So it all gets very personalized very quickly. And that's why it's a great transition. Guys, as you create success, we can give you all the content in the world telling you how to get there, but you're going to quickly realize as you create success, it's going to have more complexity in your personal life, not only for your health, but for your finances. And that's why we say, this is why we can fulfill the abundance cycle. We can give you all this free information because we know if you just do what we tell you to do, you're going to be so successful that you go, okay, this must be what the guys are talking about because I just, I need to know what Medicare plan to do.
10:40I don't know what to do. There's a lot of options for me and we're going leave the porch light on for you and let you know we are taking clients all across the country. This has been the greatest success point that my passion that started in 2006 and then we fulfilled this thing where we hopefully give you all this free education to be the best version of yourself. There is a payoff point down the road after you've created monstrous success that you'll say, hey, I remember those guys planting those seeds in me. I would love to, you know, the seeds of information that have turned into nuggets of just gold wealth and just living my best life.
11:18Why not give these guys a chance?
11:19Brian Preston:There are unknown unknowns that are going to come your way when you retire and when you reach financial independence. But if you can plan for them, if you can think through them, if you can have some logical problem solving while you're in your working years, they don't have to be scary. They don't have to be frightening. Yes, there are going to be things that are unknown. Yes, there are going to be costs that you did not know were going to happen. But the better you can plan, the more comfort you can have when you reach that stage. And that's exactly what we're here for. We want to take all the confusion and all the chaos and we want to turn that into confidence.
12:00Brian Preston:That's why we show up here every Tuesday at 10 a.m. to load you guys up because we want you to be confident in your great big beautiful tomorrow. We want you to understand that there is a better way to do money. And so if you have a question that you want us to weigh in on, that you want to get our take on, make sure you get it in the chat right now. We've got the team out in the wings collecting your questions so that we can load you up. So with that, Creative Director Raby, I'm going to throw it over to you. Yeah, I have some questions queued up and I just wanted to share there's another way that you can tell us what you care about, what you're working on in your financial life and what your situation looks like.
12:38Brian Preston:And that is going to inform us so that we can make some really awesome episodes that show where the Financial Mutant family is and their journey and also hopefully speak to some of the pain points that we see. And that thing that you need to go do to help us do that is our Financial Mutant survey. You can go to moneyguy.com slash survey. And today is your last chance to take it. So that's why I had to tell you about it at least one more time, because we would love for your voice to be included in that. So go to moneyguy.com slash survey. It'll just take like four or five minutes tops to fill out and it will really help us build the show and hopefully make it even more helpful for you.
13:17Well, I resemble this in the fact that all the time, you know, you're listening to your favorite podcasts or you see something come across on YouTube and you go, oh, that's super exciting. I want to do that. But then time passes I didn't do it. So guys, this is don't be the procrastinator. This is the last day to do these surveys. And it's super exciting for us because I was blown away when we started doing surveys on our millionaire clients. I loved the content that came out of that because it reminded me of Millionaire Next Door. And I remember how motivating that was for me when I read that book for the first time.
13:53So to be able to kind of take it decades in the future now and update the data to what our clients doing. And then when we had the brilliant idea that we were like, you know what, maybe we ought to see where the financial mutants of our audience overlap with our clients so we can kind of know who's out there listening to our content. Ding, ding, ding. That happened last year and you guys showed up in force, but we've actually realized it's like most things. Last year, we'll call it the beta. You know, we didn't know what we were doing completely. It was great content that came out of that, but this year it's even better because we already have two or three show ideas.
14:29We just need the data to now kind of shape that content even better. And so this is the new and improved version. So I really would strongly encourage you, please, if you want to help shape Financial Mutant content, go out to moneyguy.com slash survey and get that in there because this is your last day. We're not going to pepper you with too much stuff, but we do want to kind of make sure that we get that data in the system so we can create great content.
14:55Brian Preston:What I love is how well synced our team is because I was literally going to lean over and say, hey guys, we ought to do a poll. Have you done? And as I'm thinking that in my mind, it pops up right here, wondering, have you done the survey yet? I'd love to know just in our live stream audience and like our diehard core group of folks, have you done the survey yet? Isn't there going to be some bias in that survey? Because if you did the survey, if you did the survey, you're going to be proud to say I did the survey. If you're a procrastinator, you're like, well, I don't want to let the other final survey do that.
15:28Brian Preston:This is human psychology, social contract. You're going to see it. I'm going to go to the survey real fast, come back, click yes, and then it's all good. Because it's going to say 97 % of the audience said yes, and it'll be like 300 people did it out of the thousands of people in the live stream. I don't know. Oh, you're right. Take down the survey quick. to get rid of it. I don't know. Okay. Shame on me. Glass half full, Brian. Come on. Let's jump into some questions. Like I said, I've got a lot of good ones queued up. The first one is from Carly. You're missing something. What? This is a Tumblr day.
15:58Brian Preston:I was going to tell them that after the question, Brian. Now the questions are going to come in. I don't keep secrets. No, no. I like it. I like it. It's totally fine. So if you do have a burning question, today we would love to put a Tumblr in your hand. So make sure you get the question in the chat right now. If we answer your question, we'd love to send you a Tumblr. And so we will kick it off with Carly N. She says, can you count reinvesting dividends and capital gains into your saving 25 %? I make over 10K in passive dividends and paying taxes keeps me below the 25 % savings rate. Okay, I've got to think through the math of this.
16:35Brian Preston:The answer is no, but let me make sure I understand the question. I make over 10K in passive and paying taxes keeps me below the 25 % savings rate. um it in in my mind uh when we think about dividends and capital gains or capital gain distributions those are two components of return so when we invest there's generally two different ways that we get a return on an investment we either get income that flows in that's dividend or we get price appreciation i bought a thing for ten dollars now it's worth twelve dollars like those are the two ways that we get return so when i think about dividends and capital gains coming in, I'm thinking about that in terms of a total return perspective.
17:14Brian Preston:That is an ROI, return on my investment. What I don't get to do is I don't get to say, oh, well, my portfolio did so well, I don't need to do my part. No, no, no. Until I reach financial independence, until I have defined what my number is, until I understand what's the goal that I'm trying to work towards, I still need to be saving 25 % of my gross income. But what's fun is, and if you've not done this, we have a number of milestone episodes that you should go check out. What's fun is, is right now you see those dividends and those interests. I think you said it was like$10 ,000 that just came in for you this past year.
17:51Brian Preston:And that's amazing. What gets really exciting is when the amount your portfolio makes in terms of dividends and capital appreciation is bigger than what you save. That's awesome. And then what about when the amount that you have in dividends and appreciation is more than what you spend? That's awesome. And then what happens when you reach that point that the dividends and capital gains and appreciation you see from your portfolio actually makes more money than you do? It actually is working harder than you. That's when the seesaw begins to tip towards financial independence. And so what you're looking at is awesome, but it is not permission yet to take your foot off the gas pedal.
18:32Yeah, I love it. We do have that resource because people are like, where did this 25 % even come from? So if you go out to moneyguy.com slash resources, we have what you should be saving or what 25 % can do for you. So how much you should save is actually what the resource is titled. The content team threw it up there really quick. I know I'm slow.
18:51Brian Preston:No, no, it was like three different names, but we've caught it all three things. I was trying to give the content team enough time to give me the little prompt to be able to see it. Bo kind of shared, you know, I hate giving only bad news because we just basically said, no, you don't get to count that because that's part of the rate of return. So I wanted to kind of give the offset of first the motivation. Where did we come up with 25 %? That's what we've already shown you that illustration. I will give you one little asterisk that does offset this is that if your income household income is less than$200 ,000 for a married couple,$100 ,000 for a single individual, you can actually count your employer match in that number though, because that's where a lot of people will get overwhelmed by the 25%, especially if you're in your twenties, where it's very much an aspirational goal because you're just brand new to this whole wealth building journey.
19:41It's nice if your employer, especially if you have a really generous employer, we have employers out there who are doing, you know, somewhere between seven to 10%, you can imagine if the goal is 25 % and you have an employer doing 10%, this thing gets a lot easier at 15%. So go out there and take advantage of that match offset. And then maybe you're somebody, because when I first read this, I read the$10 ,000 as bigger than per year. It could have been, which it's not, but I'm just saying, but it's important because we're giving you a benchmark to of what you should be saving because you're at the beginning of your journey.
20:19And sometimes those benchmarks are rules of thumbs or other things we can give you are great starting points because it makes something that's somewhat complex with lots of variables, something very approachable and easy. But there will come a point once your assets, and that's why I love that Bo was talking about the milestone episodes we do, there will come a point to where your income coming in from the portfolio or the appreciation or the change in value is going to match either what your savings rate is or even what your income is. And you're going to quickly start realizing, hey, that savings rate means less to me because my assets are at some critical mass or boiling point that has obviously changed for me.
20:57So I need to know if I'm ahead of the curve, behind the curve, or right where I need to be. And that's where we've tried to create resources with the Know Your Number, but also ultimately it ends to the abundance cycle is that if you have started being the field general or the CEO or chief financial officer for a soon-to-be approaching seven-figure enterprise, get some help because you just don't know what you don't know. And we'd love to leave the porch lights on for you to help fulfill that abundance cycle so that you don't have to try to figure this out the first time and only time you're going to approach this.
21:32You'll have somebody who's done this hundreds of times.
21:34Brian Preston:Love it. Can I throw one more little thing out there? You may. You know, me personally, what I like to do in my portfolio, I like to have all my dividends and all those capital gain distributions automatically reinvest. One of the beautiful things is when you do that inside of your account, it naturally just sort of creates some automated dollar cost averaging. Now, if you're someone who's like taking distributions or you need the capital for some reason, maybe it makes sense to pay into cash. But if you're someone who's just buying like low cost index funds and it's things that you don't mind purchasing more of.
Read the full transcript
22:04Brian Preston:I love those automatically reinvesting so that 100 % of those dividends and 100 % of those capital gains that come out just end up going right back in, making this thing rock and roll. This is outside the question, but I fell prey because I fall prey to social media trends, just like you guys who are watching the audience. A few years ago, this is the worst performing asset in my portfolio. And that's not a testament for or against what I'm about to share with you. There was a trend on social media that said, hey, if you drink Starbucks coffee, if you will just go put this sum of money into Starbucks coffee, their dividends will essentially buy you a cup of coffee.
22:42Every, you know, I figured out how much coffee I drink. It's not a ton. It's not like Bo level, but it was enough to where I figured out how many shares I've need to buy. And, and then it's through the automatic reinvestments. It's buying that much in coffee. I've done that. It's actually, it is fun from a non-financial perspective. It is fun seeing on my quarterly statement the reinvestment of those shares.
23:08Brian Preston:Look at all those cups of coffee coming in. All those cups of coffee is coming in. But I'll tell you from overall, because we all know return is made of multiple components. It's not only the dividends. It's also what does the stock price do from a capital appreciation? And it's had some fits and starts. There was a time where it was really good. And then I've quickly realized Starbucks, it has some ups and downs. It's not the S &P 500. Interesting stuff. But I don't like being transparent. If you get caught up in those trends, it's okay as long as it is part of the fun money. Right. And, you know, that is essentially the basket of vacation money.
23:43It's not the eating money part.
23:45Brian Preston:I love it. Vacation money, not eating money. Absolutely. Carly Ann, thank you for the question. Since we used your question on the live stream, we'd love to send you a Tumblr. Email winner at moneyguy.com. Awesome. Did you see the, I think our poll results came in. They are here, yes. we have 76 % look at that have taken the financial meeting survey already and we've got 23 % who said they will right after this so 23 % that's like one in four of you need to go take that survey so we can get look at our honest audience though I mean because I would assume if you had not I don't know what he would have said no you just it's easy just to stay silent and not but our audience our financial meetings are like yeah I'll tell them I haven't done it yet we did have a few comments too saying like God, just took it.
24:29Brian Preston:Love it. We appreciate you guys. It should not take long. We tried to make it pretty easy. Moneyguy.com slash survey. Levi S. has the next question. It says, can you explain what a real world use of the mega backdoor Roth would look like? For example, I get paid weekly and after maxing my 401k, I would like to put$100 a week into the mega backdoor. so can you explain how this actually works sure can you want me to or you want to go no i can explain i'm just at first yeah brian his brain is working no no when i've done the episodes on mega backdoor i think of um what's the what's the type of of predator apex predator there is no way so i always think about you know so i immediately you think about like great white sharks but then you're like no but i think orca whales take out great white sharks so they're not an apex predator and then i start for somehow this transitions into godzilla and um you know fighting in the city and in your eyes oh my gosh you know how do you use this super powerful entity that you you've set up so mega backdoor is godzilla now all this happened in your mind between which is where my brain goes i saw the wheels turning but this is why you saw my face it's like the air, you're almost like a pinprick and you're where it's deflating.
25:55I saw$100 a week and I was like, well, okay. That's more of like a little extra. What makes mega is, I mean, we're talking about you can go up to, what's the new threshold under 415 limits? Is it$70 ,000? $70 ,000. That's Godzilla scream big when you see$70 ,000. When you see$100 a week, I hear, you know, it's a predator. It just might be a, I don't know, a barracuda or something and swimming around in the water.
26:29Brian Preston:What's a barracuda make? I don't know. They still scare you, though. If you see them in the ocean, that fish has got teeth. So for those of you that don't know, when you contribute money to your 401k, most often we know that we have two different ways we can do that. We can do pre-tax contributions or we can do Roth contributions, but there is a third type of contribution that is allowable if your plan has implemented this, and that's called an after-tax contribution. And the way that after-tax contributions naturally work is you put money in, you don't get a tax deduction, those dollars then grow tax-deferred, and then when you go to pull that money out in retirement, you get your contributions back tax-free, but you've got to pay ordinary income tax on the earnings.
27:15Brian Preston:That's the way that it normally works. And so Levi's saying, hey, okay, walk me through how this works practically. Well, a lot of plans will work in such a way that say, hey, before you can even do after-tax, you got to max out your salary deferral. You got to max out the 23.5 into your either pre-tax or your Roth, and then you can start doing after-tax. So it sounds like Levi's done that, and now he wants$100 every single week to be going into his after-tax bucket? Well, my first question for Levi would be, man, if you've already maxed out the$23.5 at this point through the year, you've been saving a certain dollar amount every paycheck.
27:52Brian Preston:Why drop down to only$100? It's exactly what Brian said. The great thing about after-tax contributions is you can go all the way up to the Section 415 limit of$70 ,000. They are not capped at the$23.5. So one of the things that you can do if your plan allows is you can every week or every pay period put money into the after-tax contribution. Well, then if your plan allows it, you can either convert those after-tax contributions to Roth, or you can do an in-service rollover where you take that after-tax money that you put into the after-tax portion of the 401k, convert it to Roth or roll it to Roth, and now you've turned those dollars into tax-free dollars.
28:32Brian Preston:And once they start growing on the Roth side of your ledger, not only are your contributions going to be able to be pulled out tax-free, but also all the earnings that those contributions make are going to be able to be pulled out tax-free. So it is an amazing thing to figure out, okay, one, is it available to me? Does my plan allow it? Does my plan allow either the in-service rollover or in-service conversion? And am I at the place in the financial order of operations? Have I thought through this, that I'm in step six and I've gone to step seven. Thank you so much. Where it makes sense for me to do mega backdoor or might I be better served if I'm going to go into the after tax bucket and I want to start building up that third bucket.
29:13Brian Preston:You want to think through when I think about my next dollar, what's the very best next use of it? And if you're someone who happens to have the mega backdoor available, might be something worth taking advantage of. And I think to my point, put words to bring this back in even better perspective context is that 52 weeks, that's how many weeks are in a year, $100 a week, that's$5 ,200. That's less than what you can even put in the Roth IRA. So when I first heard this question, Levi, I was like, it sounds like I would just confirm if you make too much money to do a Roth IRA contribution, we would have you under the financial order of operations under step five, at least check out the backdoor Roth contribution.
29:56If you have the right account structure and then of course get to step six which is max out but that's why when i saw the number was less than even what the annual ira contribution limits are it it didn't feel i didn't know if it meant if it really wanted mega because mega means we're going well beyond what um you know what we can annually put in what the government typically allows you to to put into the
30:19Brian Preston:to the roth or or 401k it was more barracuda than godzilla definitely got it barracuda versus is Godzilla. There you go. Levi, thank you for the question. Just email winner at moneyguy.com if you'd like a Money Guy Tumblr. I have another sidebar. I know we have a lot to get through, but I just can't help myself. So last night I needed to, I was looking for something fun. I was in between books and y 'all know where I'm going with this. I downloaded and I'm a little, I'm a little disappointed in our audience. I'm a little disappointed. And I don't know if Nate put this in there as an Easter egg or a love letter to me.
30:53And I just, I want him to know that I had the secret decoder ring and I saw it, Nate. I just wanted you to know I saw it. And if you planted the seed, I'm here for it. Because he lives not too far from here. Do you want to say who Nate is? I know that might be a little, but it could have been because what's the odds that he has the same speech impediment that I have? If you listen.
31:19Brian Preston:Okay, give everyone the context. You haven't said who this is or what you were listening to. Only us are on the inside. Let's let all of our friends on the inside. So I don't offend the guy I'm trying to win over. Nate's last name, Bergazzi? Bergazzi? Yeah, Nate Bergazzi. Did I get it right? Yeah, yeah, yeah. You nailed it. Okay. He was going to give me grace because I have the same speech impediment he has. But if you listen, he has this book out. I don't even know how long the book's out. It was in my Audible suggestion list. And I was like, you know what? I like Nate. So let me go ahead and hit the, yeah, I'll listen to this.
31:51and it was the big dumb eyes. Not big demise, big dumb eyes. Like I said, we have the same speech impediment, so his jokes work for me too. The thing though is if you listen to the intro chapter, there's a section where he's setting up essentially the ground rules to listen to his audio book and one of the things he says that he struggles with is he was like bull and boil are going to sound the same. Like Super Bowl is going to sound the same as bold peanuts. And I was like, oh my God, he obviously knows about the bowling point and knows I struggle with the exact same issue. So I was excited that Nate had planted this seed out there for me to discover, essentially to go out there and unearth.
32:38This is like, you know, all these new kids do all this geo splunking where they go around and find like a bottle and then they've signed their name on it with the coordinates. Nate put that stuff out there for me I found it Shame on my financial mutants Either we don't overlap Or you guys just Nobody brought it to our attention Because I think this book's been out for a while I would have thought you guys When you heard that he couldn't say Those B words That we were in the same boat
33:04Brian Preston:Maybe they just haven't read it yet And you're just spreading the word You know what Everyone's going to go check out the book now Or here's a crazy thing Maybe they read it and didn't listen Read it Wait They read it and didn't listen to it What story? since Nate really does not live far from here. That is true. If you read it, you wouldn't have known. You wouldn't know. He wouldn't have had his own audio book. Now if you guys, if you'll start peppering him with, hey, I found this book because Brian from The Money Guy Show was telling me he suffers from the same speech impediment, being Southern, as you, Nate, maybe we can make some collab happen here.
33:35I love it.
33:36Brian Preston:Could you imagine a React video with Bargatze? That'd be so fun. That'd be awesome. Hey, Nate, if you're out there, we'd love to do a React video with you.
33:46Brian Preston:i was just making sure brian had told his whole story it's just the odds that that needle is planted in that haystack i i think it was a love letter to me i think it was for me brian played us the clip this morning and it was very it was very on brand for brian speaking to him a little bit oh my gosh you should have seen me walk in the neighborhood when i heard that clip i was like oh my gosh i have to clip this so i can play it for the content team because this is What's the odds? All right. Let's dive back into personal finance questions. It's okay. I loved it. It was a boiling point, boiling point, sidebar that people needed to know about.
34:19Brian Preston:Well, we've got a question from... Before you had the Tesla. Yeah. When you had to take your car in for maintenance every like 3 ,000 to 5 ,000 miles, what were you taking it in for? Oil changes? Oil changes. Yeah. Just making sure. Oil changes. I want to make... An oil change. Oh, people say that weird? I say that weird? Well, it's just the last half of Boyle. You know, the other thing I'm surprised he didn't bring up is birthday,
34:49birthday, and then like Monday, Tuesday. Oh, yeah, yeah. You know, Southern people, we say it a little differently.
34:56Brian Preston:Instead of A's at the end, it's E's at the end. Monday, Tuesday, Wednesday. Oh, yeah. Thursday. I can keep going on this, Ruby, if you need. I'll just go into the question. You know, I think we've heard enough. Thank you, though. all right rempo has a question it says oh hi oh girls like i'm done with this i'm out oh no i loved it um but i wanted rempo to get his question answered it says is it better to wait to age 70 to claim social security so the benefits max out while drawing down your portfolio or claim early and let your army of dollars keep working if you know look the easy answer is that yeah we want you to take it at 70 and i'll tell you the positives and i'll tell you why that's not it's not the perfect answer because personal finance is personal is it a lot of people don't realize that full retirement age a magical thing happens once you hit full retirement age and then the deferral to age 70 is that your benefits will go up 8 % per year.
35:56And there's not too many guaranteed rates of return that are that high as 8%. So that's why there is a lot of school of thoughts. If you don't need the money, deferring Social Security is a good thing. But there is a big thing in the background that I'm a victim of, my family is, and anybody who else has lost a loved one at a young age is that if you die without taking your benefits and your say your spouse and you make about the same amount of money so it's not like one has a big benefit over the other your death benefit on social security is like 255 dollars so there's um now look i'm i'm glossing over some other benefits because there are survivor benefits but like i said that's why i put that caveat if you make about the same amount of money as your spouse those survivor benefits just ain't as they're not as as popping as they would be if there was a big disparity there.
36:49So I don't know if I left any meat on the bones for you.
36:52Brian Preston:The answer to your question, Rumpo, you said, is it better? And the answer is, it depends. And a lot of people don't recognize that the decisions you make around Social Security can have huge implications in retirement. And we mean huge to like hundreds of thousands of dollars, depending on your unique circumstance. We have had clients that have retired early, and we have recommended, hey, you need to start drawing at 62. And here's why. Even though you're going to take a reduction from your full retirement age benefit, but based on their account structure, based on their living needs, age 62 made the most sense.
37:27Brian Preston:There have been other clients who said, hey, you really need to wait until age 67 because you're still earning income or whatever else. We don't want you to get penalized because of income that you're making. And then there have been others who've said, hey, it makes sense you make all the way till 70 because it's some of the best longevity protection you can have inside of your portfolio. But then it's not only an individual decision. When it comes to Social Security, if you are someone who's married, then it gets even more nuanced because you might even say, OK, well, I'm going to start drawing early on my record at 62.
37:59Brian Preston:But then when my spouse hits for retirement age, they're going to start drawing. And based on the disparity between our earnings, I'm actually going to get an increase to the spousal benefit. it. And so it can be incredibly nuanced. And so often we'll see people come in and we'll kind of work through this social security analysis with them. And we'll recognize, hey, the plan that you had or the plan that you're, you're like, you're leaving some money on the table. Like you should really think through this. And we've even had this before where somebody said, oh, you know, I'm going to, I'm going to start drawing at 62 because I paid in.
38:30Brian Preston:I want to get my money out. I don't, I'm nervous about it. And we've actually walked them through the analysis saying, hey, just so you know, this is how much it's costing you by making this decision. Let's actually make the decision to go undo this election. Let's see if we can go back in time and change this because it was that significant of a change. So social security is one of those things. You want to make sure you make the decision well, and you factor in all the other pieces of your financial life because it can have huge implications when it comes to your retirement. So the big thing, because I think Social Security is one of those, it's part of the public discussion.
39:08We always, Social Security is just part of society. But I think it has very strong emotions depending upon how it's been used or like for me forever, I was so mad about Social Security because of what it did for my family with my dad dying in his 50s and watching those benefits just evaporate to where my gut reaction at first was, when I turn 62, I'm taking that money. Don't let this be an emotional decision. There is actually a lot of moving parts, and it is, once again, back to the personal, impersonal finance. So just don't let those falsehoods or those other things that just kind of somehow seep into our beings, guide you into thinking this is what you're going to do with Social Security.
39:49There's actually a big analysis that needs to go into it where it's very personalized, not driven by emotions, but actually what the nuts and bolts of your financial success are built off of.
39:59Brian Preston:love it that's great Rempo thank you for your question we'd love to send you a money guy tumblr since we featured your question on the show just email winner at money guy.com next question is from cranny it says my employer just announced they are going to stop matching out 401k contributions which is a bummer any advice on what i should be doing or changing which is a great question because 401k match is step two in the financial order of operations for a reason. I would love to know, I'll let Bo do the technical part, but I'd love to know the context on why an employer announces that because that sometimes can be a very big red flag.
40:38Sure. I would first want to go know the financial strength of my company if they were shutting down because most employers, when you turn on doing these benefits, you kind of know this is a switch. When I flip this switch, I kind of need to be prepared that I'm going to fund this every year because it's kind of a promise I'm making to my employees. And so for an employer to now say, we're going to shut down doing matching funds, I'd love to know, is that money going to something else? Like are they firing up a pension in the background or a cash balance plan or where the same amount of money is being diverted to be used in a better or more strategic way?
41:22or is this a red flag that there might be problems in the operations of this company? I'm not trying to scare you. I'm just trying to tell you this is one of those things when I see a change in benefits, I'm like, hmm, I wonder what's going on there.
41:36Brian Preston:Now, we have done this before where we've had a plan come to us and working with the owners and we've analyzed. They had a match on their plan in place because that's the way it was set up. you know, 8, 10, 12, 15 years ago. And what happened is when we analyzed, we said, you know what? Hey, this match is actually costing a lot of money. It would be more effective for you to move away from this match over to some sort of safe harbor formula where we're going to do non-elective contributions. So it could be that, it could be that, but perhaps not. And perhaps it is one of these red flags you ought to look at.
42:13Brian Preston:And so what do you do? Well, first thing I think you should do is I think you should stop and go to moneyguy.com slash resources and download your copy of the financial order of operations. Because Rebe already alluded to this. Employer match is step two. It's a free money step in the financial order of operations. But now, if that ends up going away, I want you to retriage your situation. I want you to say, okay, do I have any high interest debt? Do I have high consumer loans? Do I have high auto loans? Do I have credit card debt? Should I now I'll redeploy what I was doing to get my match to go extinguish that.
42:48Brian Preston:No? Okay, great. Do I have a fully funded emergency fund? Do I have at least three to six months of my living expenses in liquid cash readily available for the unknown unknowns of life? Okay, I've got that check. Boom. Then I go to step five. Am I doing my Roth IRA? If I'm married, is my spouse doing their Roth IRA? Are we doing a spousal Roth IRA? And am I eligible for a health savings account? Am I putting money into an HSA. Okay. If I check that, boom, then I get back to step six. Then I can say, okay, even without a match, there are still compelling reasons to fund a 401k. There are great tax benefits.
43:25Brian Preston:I either put the money in and get a tax deduction on the front end if I'm justified in doing so, or maybe I put money in the Roth. And even if I'm not getting a match, there's still some really exciting tax benefits that can happen from that happening and compounding through time. So I think in your situation, Cranny, what I would do is I'd go back, rework through the Foo, and figure out where those dollars will best be deployed. Class it up with Crocs. You know back to school is coming in fast, so why wait to find your new fave footwear? Step into a local Crocs store and step into your new look.
44:03Brian Preston:Try it, style it, Make it yours because the right pair doesn't just show up. It shows off. First day fits handled. Walk out ready for whatever's next. Visit your nearest croc store today. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast.
44:44Brian Preston:Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs. Well, Cranny, thank you for the question. I think that you've got a lot to think about there and a lot to consider. If you would like to sip on some coffee while you consider from a MoneyGuy Tumblr, just email winner at money guy.com because we would love to send you one or to keep that icy beverage cold as a koozie. That's right. It could also be a koozie as Brian proudly models for us on the show. Are we, I'm seeing we get some audio issues or everything, everything good about their audio team. We all cool.
45:20Okay.
45:20Brian Preston:They're all looking like they didn't know that. Seems good on our end. A bunch of people in chat said the audio was kind of cutting in and out. So just want to make sure it's not something on our end that's happening. we will double check that for sure. And if they wonder if this is really live and we really look at the chat, we actually do. Bo does. Reedy does. They don't let this guy see it. We don't let him see the team. They'll be like, squirrel! I thought it'd be hilarious. What if we had a huge screen in the back of the studio where the chat was just scrolling? He would be like, we're just reading it in real time.
45:53Brian Preston:Did you listen to Rekrani's question? I'd be like, sorry, I got distracted. all right we do have some more questions let's go on to jave david g's question it says what are your thoughts about private equity investments for someone when they first reach the point of qualifying to be an accredited investor hey we have to we have to start the question because this is to prove the point of what we were just talking about somebody in our advisory team just sent a money guy blast because we got an audience member who said something really nice about us to the advisory team and they just blasted it to the team well that notification shows up on my watch so i'm over here and i'm like oh don't read it brian don't read it so we just proved the point okay start the question that's a great example and i can't see the chat we're gonna make it you're gonna take off your wearables now you're gonna like take off the watch during the show now Yeah.
46:46Brian Preston:That's hilarious. All right. Let's start this over. David G. asks, what are your thoughts about private equity investments for someone when they reach the point of qualifying to be an accredited investor? And we should probably define what an accredited investor is, I think. So go for it. So, Brian, you have some experience with private equity and where you've seen that be used and recommended. So what are your thoughts on this one? because it sounds like it's my microphone that's cutting out. Oh, it's you. It's Bo's microphone that's the problem. Brian, you're up. Bo is the issue. Oh, my gosh.
47:23Oh, wow.
47:24Brian Preston:You have to answer this question. I feel like my spaghetti moment just kicked in here. M &M's starting to play in the background. That's all right. We're ready for it. Here's the thing. Yes, when I was working for a very large fee-only firm, we put clients. It wasn't just private equity. We did a lot of private placements. We would structure real estate deals. We'd structure hedge funds. We'd structure all kinds of things where we would go market to our wealthy clients. Hey, this is where you should put your money in. And look, and a lot of these things, they can be very good. I mean, one of my neighbors works for a private equity firm and they seem like they have tremendous success for how they're managing money.
48:05And I'm assuming, you know, so a lot of these things, they do well, but it's all like everything else. Who are you going into business with? because they're not all created equally. And is this, that's one thing, is this private equity firm that you're thinking about investing in going to be cream of the crop, or are they just taking advantage of this is what rich people think they should be doing and they put together this product that they're now marketing well to get you in? Or the other thing I always say is, do you need it? Because what I found when I was managing people's money at this other firm is that there were a lot of incentives is for us to put the clients in this.
48:44Because realize when you put a client into a private placement, this product probably they can't get out of for seven to 10 years. I mean, it is going to have, there is going to be, it is going to be something that will lock them down for close to seven to 10 years. Likely, can you imagine from a client retention perspective? That's brilliant. I mean, that's a feature of you putting your wealthy clients in this thing. The other thing is that once again, the whole accredited investor, what's accredited investor? Accredited investor means you have enough money that the government's saying, hey, you're rich enough that we're not going to put the basic protections that we require on the general public to make sure you're not getting ripped off and other things.
49:23We're stripping a lot of those protections away because you're rich enough that buyer beware because you're on your own. And that's why they're required to give you all these offering packages and other things. and they'll write down the date that you received it is because then they can go, you know, this is a rich person. They're not protected. We can take their money if we need it. I'm oversimplifying, but that literally is kind of what the breadth of this thing is. I feel like I'm still dancing.
49:53Brian Preston:The only thing I'd add to that, and you kind of alluded to this a little bit, a lot of people feel like they don't want to dance with the one that brung them. I got to the accredited investor status. I don't remember what it is for this year. It's like$2 million liquid or there's a net worth threshold. Whatever the accredited investor status definition is. It used to be like$250. I don't know what it is now. Yeah. Google it. And people realize, hey, I got here by saving 25 % of my gross income and by investing in low-cost index funds and by having very simple publicly traded investments. And I was able to build this wealth by doing that.
50:33Brian Preston:Well, now, all of a sudden, I've hit this new threshold. I must need to do something else. I must need to go do something more complicated or more different. A lot of people would be surprised to find, Brian, a lot of our clients who have substantial portfolios. I mean, we're talking about seven-figure, eight-figure, multiple eight-figure portfolios still do the same type of investing that folks who are at a million dollars or$2 million do. it doesn't have to be more complicated. That's not to suggest that you should never do private equity or that's never a viable option. But I think far too many people think, oh, it's the natural graduation point.
51:11Brian Preston:Just like, okay, well, if you don't own a rental property, then you're not serious about money. That's not true at all. If rental properties don't make sense for you and it's not something you want to do with your dollars, you don't have to. Private equity and venture capital and those types of investments are the exact same. If it's not something that you want to be doing and it's not something you understand well it's not something you have to be doing in order to be able to build well i mean i don't mind sharing at our firm we don't do private placements yeah we don't i mean i just um because i saw like i said there are a lot of features for the person who were selling it i didn't necessarily think it was necessary for and that's not an indictment or say something's bad it's just that i just wasn't compelled to feel like I needed to, when I was designing my wealth management firm, I didn't feel like it rose to the level that this was going to be something that I needed to add as a feature.
52:02Because a lot of what I try to do as a fiduciary advisor is treat your money like it's my money. And if I don't have my own money in some of these private deals, I'm like, why would I put a client? Yeah, it'd be great for me that I get to lock their money down for 10 years, but is that in their best interest? And it just didn't rise to the level. It doesn't mean these things are bad. I will give an editorial statement on something I've noticed in the economy. Like I said, I have friends that work in private equity, so I'm not against private equity. But I do think the whole game with private equity is that they put a group of holdings together.
52:34And they're trying to get bigger because the bigger you are, the bigger your multiple is. Your valuation multiple is going to be bigger. So they take a bunch of small things, bring them together, and then they get to be a bigger multiple. and then they hopefully in three to five years get to roll up and do this whole transaction all over. What that has created in society, and it drives me crazy because it's landscapers, it's your dentist, it's your third-party administrators. Oh my gosh, your TPAs. It's all these industries, because they're just trying to get bigger, not better, bigger, so they can get the higher multiple.
53:11I think people have forgotten how to run businesses. And how to treat customers. They go in there and they target sticky businesses. It's very hard for you to go fire somebody for. And the service goes to pot, and it drives me crazy. So it has nothing to do with this question that David G asked, but I think that it's just something we as a society ought to be looking at. It's like, where is the value add on what's actually increasing? Because it basically looks like it's just a math game that people are playing. And there's got to be trees don't grow to heaven, and if we're all trying to get bigger and bigger and get higher valuations, but we're not actually making the product better.
53:47Because that's the thing I've always liked about markets and systems is you create a better product and you do some service better than anybody else. The customer is going naturally want to give you their money and then give you their money over and over again. This is kind of working against that in a way. And the fact that it's just saying, no, let's go find sticky transactions where it's hard for people to want to move from this product. and then let's just cut all the service or the features out of this to save money and then let's see if we can turn this into a bigger operation just because it's worth more on paper and that that's not great that i don't love it okay i probably went too far no i don't know we probably hear it from my neighbor
54:30Brian Preston:hey why did you pick on private equity why'd you go no i think no look there's a there's a place. There's a place for it. And there's like a time where it makes sense. And there's a lot of times that private equities will step in and create liquidity for a business or an owner who otherwise would not have had the ability to do that. I just don't know for the everyday investor or even the everyday accredited investor, which is kind of a wild way to say it. I don't know that that's something that you have to be doing with your money. And again, you want to, if you are going to do it, measure two, three, four times.
55:04Brian Preston:Make sure you underwrite the deal well to know if it actually makes sense for you. Are we helping people get married now? Is the Money Guy show turned into? Because I just got a note from the content team. Hey, Ken, you please give a shout out to my fiance, Noah W. He's a huge fan, but doesn't know that I'm listening too. We're getting married in 11 days. Love, Kenzie K. Kenzie and Noah, congratulations on your pending nuptials. That's super exciting. And if you'd like to, if you have a compelling and interesting story that the world could benefit from, you should consider coming on Making a Millionaire.
55:40Some places have kiss cams. Now we have just shout outs, you know. That's it. Two fiancés.
55:44Brian Preston:So if that is something that you want to check out, go to moneyguy.com slash apply if you want to apply to be a guest on Making a Millionaire because we love telling interesting stories is about folks that are doing awesome stuff with money. And that might be you guys entering into this new marriage. So congratulations. Hey, by the way, I'm glad you have a microphone. It made me, you know, swimming out there. This is what I felt like. This is what Bo must feel like when he's swimming in the ocean. It's because, I mean, I was just, I was, you know, I have. That's a sick burn. Because I have. I had this, you know, I do this every week and you would think talking.
56:20But then when I was told, no, you're on your own, Brian, all by yourself. it just felt like oh my gosh i miss i miss my man bo if you would have said something that was like
56:28Brian Preston:wrong or off or i felt like i like needed i would have like lean i'd have been lean i'd have been everybody like he would have walked over to my desk and been like all right revy we i need this microphone i think you did awesome though yeah you did honestly i think probably at least one or two questions every lifetime i'll just take my microphone away and just brian solo I think it'd be awesome. With Josh running around trying to feverishly throw a line into yours. Yeah, shout out to the AV team. I don't know if you know this. They actually replaced my mic cord during that question, and I bet it was all done off camera.
57:00Brian Preston:I bet they had the close on. I didn't see it, but I bet they had the close on. It's amazing. Nobody would ever know. Professional team over here. They'll never know. They're going to know. Well, David G., if you would like a MoneyGuy Tumblr, just email winner at moneyguy.com, and we would love to send you one. man it's almost like in the matrix though are you we're trying to show people this is a live show you know because we've had people accuse us that this is not a live show and we're like okay let's make sure on this episode that we put enough gimmicks in there that people say yes yeah if this is what the show we're like after high production value what are we doing that's funny well amber h has a question for you guys she says can y 'all explain what a step up in basis means in relation to inheriting property.
57:47Brian Preston:So it's a little game of what does this word actually mean? Please explain. Brian, you are CPA by training. Stuff like this one is right up your alley. Well, what's funny is that this actually came into my life yesterday. Since it's a client slash mother-in-law, we met with my mother-in-law's attorney yesterday on the phone, and we were talking about just some quirky things you know that my mother-in-law sometimes she listens so ramona if you're listening big shout out to you love you um but it's so funny to me is that i i say this to my wife i'm like everybody listens to me but the people that i love sometimes is because you know it's just some quirky titling that that has been done without my my knowledge and we're working on you know getting all that fixed up on the estate plan for for my dear dear mother-in-law who gave me the gift of my beautiful wife.
58:41But it is one of those things where you have to be very careful with how you title assets. Just don't start strapping loved ones onto accounts because you can very closely or very easily screw up this awesome benefit called step up and basis. And what this means is, is we have an estate system. Now look, there's issues and they're slowly, because if you die with too much money, the government will tax you. But for the majority of Americans out there, you're not going to reach those estate exemption or limitations. So for most of you, the way the tax laws are written is that if you die with appreciated assets, it can be real estate, it can be your investment portfolio.
59:20But if it's appreciated, when you die, your beneficiaries will actually inherit the assets at the new market value of what it was at the date of death versus all of your unrealized basis. Your basis actually gets stepped up, just like the name implies. As you can imagine, that is a huge benefit for most Americans. Think about it. You bought your house with real estate being as crazy as it is right now. I think about my parents. They bought their house in the late seventies for$60 ,000. Now they're in South Atlanta, so it hasn't run up as much, but still, if they sold this for, or they pass away with$400 ,000 value, you don't pay the income taxes on the$340 ,000 of gains.
1:00:07You get what's called a step up in basis. Your grandmother, who's from, I'll use another Atlanta example because we're both from Atlanta. You know, great grandma bought into Coca-Cola, you know, back when Coca-Cola was just, you know, trying to figure out how to get the cocaine out of the recipe. I don't know if that was ever in the recipe, by the way. That was a joke. That was a bad joke. Bad joke. Maybe it was because I think they did have Coca in the recipe. But anyway, great grandma got into Coca-Cola back when it was pennies, pennies. So you could buy tons of shares of this thing. Well, now, if she passes away with it, you don't pay income taxes on that appreciation.
1:00:47Now, imagine how this gets if you screw this up, whereas all of a sudden grandma's sick. And then at the last minute, y 'all go in and say, you know what? She's got all these shares of Coca-Cola. We don't want to pay income tax on that. So let's just start changing. We'll just gift it. We'll gift it, put it in your name. That is a disaster. But somehow people do this all the time. They go and they put loved ones' names on accounts or they just start gifting shares without understanding that you might be screwing up one of the greatest financial benefits of passing away with highly appreciated assets.
1:01:24Brian Preston:Yeah. And just to close the loop on that, if you end up gifting the appreciated securities or the appreciated property or whatever it is, your basis in that carries over to the gift receiver. So rather than getting the step up, if they were to sell it at some point in the future, from a tax standpoint, they're going to have the same basis you had on it. So it's much better for your heirs to inherit property than it is for you to gift property. Now, if you are someone who's over the estate limits and you're over$15 million, or as a couple, you're over$30 million, first, you should go to moneyguy.com slash work with us and reach out.
1:02:01Brian Preston:And secondly, you might employ some strategies where you want to begin gifting assets, but for the vast majority of Americans, that's not the case. For the vast majority, it's much better for your heirs to inherit. So make sure you understand that. And if you happen to unfortunately be the beneficiary where someone passed away and left you assets, a lot of times people don't automatically do this. So maybe there was a property or a home or a commercial building. One of the things you're going to want to do is you will want to go get an appraisal, a property value on that thing, or you want to know the value of the securities on the date of passing so that you have a record of what those market values were so that at some point in the future when you do sell it, you can say, no, no, this got to step up in basis on this date at this value.
1:02:50Brian Preston:And this is my new tax basis in this property. Hey, did I say enough so we don't get another cease and desist letter? He's like, man, I'm trying to, what's the second one? Sometimes, I mean, this thing, this brain is so much faster than my mouth filter is. So I just want to make sure that we did. Do we put enough disclaimer in there so we don't get the cease and desist? I think we're great. I think we're okay. wait Amber H if you would like a Money Guy tumbler maybe you could fill it up with some Coca-Cola if you want to just email winner at moneyguy.com sorry I just never heard that so you just sent me on there goes that sponsorship oh gosh I don't know I can't comment oh man oh my goodness this was fun we really love being here live streaming hanging out with you but also talking personal finance, hopefully helping you think through your personal situation and feeling a little more confident in what you're doing with your next dollar.
1:03:47Brian Preston:And hey, if you have not kind of put your voice out there and shared your story. Instead of telling jokes, we should have been telling everybody, go moneyguy.com slash survey. I don't feel like we boosted that enough today. We didn't. Well, I was about to do it, so now you really did it for me, which I'm very grateful for. Moneyguy.com slash survey. Go share your story, your financial situation with us to inform future future episodes we would greatly greatly appreciate it hey has anybody heard from nate yet bargatze yeah i figure is he in the live stream did he reach out in the chat but i mean he could be watching i did there was a nate in here whose name was just nate but i don't know if it was him okay well you know nate if you're out there i'm still thinking it's happening i just am such an optimist i'm like there is zero chance that is by coincidence somebody somebody made this call they're like oh wow nate bargatze he goes from like hosting the emmys to like hanging out with the money guys and that seems reasonable to me.
1:04:39Brian Preston:I can't help the timing. His star has risen to the point that I realized this yesterday on my walk. That's just unfortunate timing. You know I told you this was two years ago three years ago I've mentioned this on the show before I was at the Williamson County Fair here yeah and he was just over there standing by the ride waiting for his family to get off. This is before the Netflix special before all that but you know I was a fan pretty early on. He was just hanging out there at the fair just to do. So really Bo missed the opportunity i should have i should have gone to say hello so he didn't run up to you he did not act like that works against my theory then that's not good if he didn't run up to you maybe a new listener potentially okay that works against my theory that he planted that for me oh all right because he would anybody who knows me maybe he would just recognize big old beefy bow out in public and be like especially at the williams county fair i don't really know why that would She said maybe he would just recognize you and wouldn't recognize you.
1:05:33Brian Preston:I was just trying to make Brian feel better, but that's pretty unlikely because you guys are kind of a package deal. Did you go to Williamson County Fair this year? I didn't go this year. I still went twice. My wife and kids went, but I had something going on that evening, so I couldn't go. So they were super juiced about it, but I did not make it this year. Too bad. By the way, I have yet to go to the Williamson County Fair and not hear about celebrities roaming around. It happens all the time. so okay well that's god i have really taken the energy out of this that's that is a horrible guys i'm your host brian this is bo reby go check it out moneyguy.com slash survey if you haven't done it you know there's probably only six of you left at this point and um if you haven't gone and taken advantage of all of our free stuff it's moneyguy.com slash resources money guy team out the money guy show is hosted by brian presson and bo hansen brian and bo are partners with Abound Wealth Management.
1:06:28Brian Preston:Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through The Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss. Thank you.
1:07:26Thank you.
1:08:26Brian Preston:We'll see you next time. Get up to 80 % off area rugs and up to 60 % off outdoor and bedroom furniture. Shop Wayfair's huge selection of styles and find the piece to fit your style, budget, and space. Plus, free shipping. Black Friday in July ends July 27th. Shop today at Wayfair.com. Wayfair, every style, every home.
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Fidelity released their 24th annual Retiree Health Care Cost Estimate, which revealed that a 65-year-old retiring in 2025 can expect to spend an average of $172,500 in health care and medical expenses throughout retirement. We walk you through our thoughts on Fidelity's study and talk through how to financially plan for the retirement of your dreams. Then stick around as we answer your financial questions!
Please note: this episode was recorded live on September 16, 2025. The Financial Mutant survey referenced is now closed!
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